Now, wouldn't it be great if you knew exactly which stocks the institutions are buying and when? Actually, you can.

Although mutual funds and other institutions don't disclose their buys and sells frequently, you can track their moves by watching for clues in trading activity.

One of the most useful ways to spot current institutional trading is to study volume percent change figures, in other words, how much trading rose — or declined — in a day compared to normal. (By normal, we mean the average daily trading volume over the past 50 trading days.) Because this information is continually updated, it is the quickest way to detect institutional trading in a stock. When volume spikes up 50% or more at the same time the stock goes up in price, that's generally a clear sign that major investors are moving into the stock with both feet. This usually precedes a significant rise in the stock price. But if a stock's price drops on heavy volume, it's a sign large investors may be moving out of a stock. If a stock's trading volume advances but the price goes nowhere, it could mean the stock is reaching a peak. Information about volume changes appears in IBD's daily stock tables. In investors.com, volume figures are continually updated on a 20-minute delay.

Related Resources:

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